Regional universities face international student slump as visa refusals and political rhetoric deter applicants

Regional universities across Australia are facing mounting difficulties in recruiting international students as high visa fees, rising refusal rates and increasingly heated political debate over immigration deter prospective applicants. University leaders warn that the decline is putting financial sustainability under pressure and could affect the quality of services available to domestic students.

Latest figures from the Department of Education, released in October, show that Australian universities are filling, on average, only about two-thirds of their allocated international student places. Just five public universities have reached more than 80% of their capacity, all of them located in capital cities.

Regional institutions are facing even greater challenges. Mike Ferguson, pro vice-chancellor for international students at Charles Sturt University, which operates campuses across regional New South Wales, said the university had filled just 40% of its allocated places this year.

“We’re around 35% down on where we were last year, and we had expected to grow from last year,” Ferguson said. “Currently we only have 20% of the international student volume we had prior to the pandemic.”

Charles Sturt University estimates that the shortfall in international student recruitment compared with pre-pandemic levels is costing it $35 million. The financial strain has prompted the university to announce job cuts and restructuring.

Ferguson attributed the decline to government policies, including an increase in student visa application fees to $2,500, high refusal rates and uncertainty created by immigration proposals announced by the Coalition and One Nation.

Regional universities rely heavily on students from South Asian countries, where visa refusal rates have reached about 53%, according to Ferguson.

“It’s not only resulting in us losing what we believe to be largely genuine students … but it’s also creating a large deterrent from new students to come in and apply, knowing they’re having to pay world record visa fees with only a one in two chance of actually getting a visa,” he said.

However, Ferguson backed Labor’s decision to tighten restrictions on international students switching courses or institutions after arriving in Australia, as part of efforts to curb visa hopping and strengthen the integrity of the system.

Higher education expert Prof Andrew Norton said falling international enrolments were affecting public universities across the country because fees paid by overseas students help subsidise teaching and research.

“It creates massive problems because international students are basically the only profitable aspect of university operations,” Norton said.

Duncan Bentley, vice-chancellor of Federation University in regional Victoria, said his institution was also facing significant financial pressure as international student enrolments fell. He supported measures to prevent students from switching courses without legitimate reasons but called for a targeted visa pathway to help regional universities attract students in areas facing critical skills shortages.

Federation University has urged the government to introduce a special regional skills student visa for international applicants pursuing qualifications in priority fields, including allied health and teaching.

“We endorse, and have been asking for a long time for, the 12-month ban on course hopping, apart from exceptional and genuine circumstances,” Bentley said.

He proposed that the visa be available to international students seeking to study at regional universities in courses linked to local workforce shortages.

“The course should be on a regional skills shortage list, based on the premise that domestic regional graduates can’t meet the demand,” he said.

The financial consequences extend beyond regional institutions. George Williams, vice-chancellor of Western Sydney University, said the university had also recorded a significant decline in international enrolments, putting pressure on budgets and the services available to domestic students.

“It has an enormous impact on our budget and it means universities across the sector are asking where they can save money, where they can pull back,” Williams said.

He said international student fees played a major role in subsidising domestic education at his university, adding that declining revenue could force institutions to reconsider the support they provide to local students.

Williams also pointed to the increasingly heated political debate over immigration, saying it could leave prospective students questioning whether they would be welcome in Australia.

Adelaide University reported a similar challenge in September, telling the ABC that it had reached only 60% of its international student capacity after its merger with the University of South Australia. The shortfall raised the prospect of a $90 million revenue gap.

The Australian government set its international student planning level for 2026 at 295,000. However, current projections indicate that enrolments are on track to reach about 250,000, only slightly above the Coalition’s proposed limit of 240,000.

The government is also moving to reduce the number of international students eligible to bring family members to Australia while studying. The Coalition, meanwhile, has pledged to abolish temporary graduate visas, adding to uncertainty over the longer-term prospects for international students.

Phil Honeywood, chief executive of the International Education Association of Australia, said declining international enrolments in regional areas could also deepen existing workforce shortages.

“The high non-refundable visa cost makes the system more like a lottery ticket,” Honeywood said.

He said regional communities already faced shortages of nurses, childcare workers, aged-care workers and engineers. If fewer international students enrolled in regional universities and graduates were unable to remain in Australia to work, the consequences could extend well beyond university finances.

The decline in international student recruitment is therefore raising concerns not only about university budgets but also about regional Australia’s ability to attract skilled workers. University leaders argue that a balance between visa integrity, sustainable enrolment policies and targeted pathways for students in shortage occupations will be essential to protect higher education and meet local workforce needs.